U.S. Senator Tim Scott (R-SC), the ranking member of the Senate Banking Committee, introduced a measure on Monday to repeal the Consumer Financial Protection Bureau’s rule that would cap credit card late fees at $8.
The CFPB estimates that the fixed flat late fee ($8) will save American families about $220 per year in lower fees (the average late fee is currently $32). The Bureau also estimates banks brought in approximately $14 billion in credit card late fees a year.
Scott, however, argues that the CFPB’s low late fee is an attempt to “demonize commonsense incentives that promote financial responsibility.” He wrote: “The CFPB’s rule will decrease the availability of credit card products for those who need it most, raise rates for many borrowers who carry a balance but pay on time, and increase the likelihood of late payments across the board.”
If you can believe it, Senate Republicans are actually trying to increase credit card fees for Americans.
Democrats will not allow this bill to become law.https://t.co/BhXXWge1Lv
— Chuck Schumer (@SenSchumer) April 12, 2024
Senate Majority Leader Chuck Schumer (D-NY) criticized Scott’s measure and wrote: “If you can believe it, Senate Republicans are actually trying to increase credit card fees for Americans. Democrats will not allow this bill to become law.”
Even if the measure does pass the Senate and House, President Joe Biden is certain to veto it. At his 2024 State of the Union address (video above), Biden applauded the mandated change as part of an overall war on “junk fees.”